It’s getting serious now

Hi
So I started a DMP in December 2017. I pay £250 per month and based on this it’s going to take me 10 years to pay off the £32k unsecured debt.

Despite the initial euphoria of having “made a change” I am finding that the whole situation is making me ill. I get two weeks into my salary and I have nothing left. It’s affecting my sleep and my mood to the point where I am becoming very introverted and self loathing.

I am married with 1 child. Our household bills are paid each month but there is little spare for anything else.

I am considering a secured loan to pay off the debt and end the dmp as opposed to remortgaging. Our bank will not help with a remortgage despite us having equity in the property. I keep telling myself it’s just like a remortgage (second product secured on the house) but I don’t know if this is a sensible option? It would halve my total debt repayments if taken over remainder of mortgage term.

Any advice? Is it stupid?

Comments

  • sourcrates
    sourcrates Posts: 28,717
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    edited 11 October 2018 at 7:35AM
    Hi,

    Please don’t decend back into the credit bubble, that’s not the way to deal with it.
    Give us an idea of your current budget, and your current payments, maybe it can be re-jigged or maybe you should look into the possibility of an IVA instead.

    Give us some figures to work with and we’ll see what comes up.
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  • datlex
    datlex Posts: 2,237
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    Don't secure additional debt on your home. It will mean if you do need to move, you have less equity to do so. 10 years may feel like a long time, but it soon goes.
    Paid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.
  • DawnW
    DawnW Posts: 7,423
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    Is your DMP with one of the free debt charities? You aren't paying a DMP company, are you?
  • Suseka97
    Suseka97 Posts: 1,562
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    ...............I am considering a secured loan to pay off the debt and end the dmp as opposed to remortgaging. Our bank will not help with a remortgage despite us having equity in the property. I keep telling myself it’s just like a remortgage (second product secured on the house) but I don’t know if this is a sensible option? It would halve my total debt repayments if taken over remainder of mortgage term.
    Any advice? Is it stupid?

    I know this has already been said - but please, take it from someone who's been there and done that, you definitely should not take out any sort of secured loan to pay off unsecured debts. I made that mistake many years ago and saw that as the answer to our (then) debt problems - big mistake. You'll be paying interest for a loan, but I would imagine all your debts are now defaulted and all interest has stopped.

    Also, and I'm not saying you would do this, over the preceding years we once again started to build up unsecured debts and ended up where we were in 2013 having to set up a DMP. If I'd only known all those years ago about DMPs I would never have taken out that secured loan and we would have been debt free years ago.

    I agree that if you post up your current budget people might be able to give you some pointers. If you are finding yourself partway through the month with no money, then your DMP arrangement isn't right and I do hope that you are not using a fee paying company.

    There are other options out there, such as an IVA as mentioned by sourcrates and whilst that sounds a bit scary, it's not as bad as you might think and you would certainly be debt free in a shorter space of time, without resorting to borrowing.
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